2014/08/13 Digital economy opportunities in Asia–Pacific and the Middle East and Africa: key verticals

Asia–Pacific (APAC) and the Middle East and Africa (MEA) are two of the most fertile regions for digital economy deployments. Data from Analysys Mason's Digital Economy Readiness Index (DERI) – a compilation of more than 340 digital economy initiatives by 32 of the largest operators worldwide in terms of mobile revenue – reveals a divide between these two regions, as well as potential opportunities for operators and vendors.

Each initiative in the DERI receives a readiness score assessed across two distinct axes: the scale or type of an initiative – which indicates its size and reach – and its maturity, which indicates its position in the lifecycle of a digital economy initiative.

APAC and MEA have distinct digital economy profiles

Data from the DERI enables a top-level view of each region's distinct digital economy profile, and the key verticals in each of them.1

• The MEA region has a high number of mobile health deployments. A third of the initiatives that we tracked in MEA were related to mobile health, making this the vertical with the largest number of deployments in the region. In contrast, mobile health represented 18% of initiatives in APAC. The relatively high level of activity in mobile financial service initiatives in APAC indicates that innovation may also be happening with smaller, local operators and not only the largest players.
• Mobile education is important in both regions. 46% of all mobile education initiatives tracked in DERI were observed in the APAC region. However, MEA leads in terms of average readiness score. Education is perceived as a key social mobility enabler in these markets and can be effectively monetised directly (subscription services), or indirectly (churn prevention).
• APAC dominates MEA in terms of the number of cloud-based services initiatives.2 This is stimulated by smartphone penetration – Analysys Mason expects smartphone penetration as a proportion of total active handset connections in APAC to reach 34% by the end of 2014, while it will be 16% in MEA.

The DERI assesses digital economy initiatives on more than just numbers of deployments

Operators in MEA, such as Ooredoo, MTN, Orange and Saudi Telecom, have deployed fewer mobile health and cloud-based service initiatives than operators, such as NTT Docomo and SoftBank, in APAC. However, the initiatives in MEA receive higher readiness scores on average.

In MEA, mobile education and mobile financial services are the two most successful verticals in terms of average readiness score (see Figure 1). MEA commands the highest scores for mobile financial services worldwide, followed by APAC. In the former, Vodafone's M-Pesa, MTN Mobile Money and Orange Money are 'best-practice' examples of product–market fit. APAC's deployments have been driven by the success of contactless and mobile-only payments, and money solutions. Nevertheless, average readiness scores for mobile financial services are slightly lower in APAC than in MEA, because the most successful initiatives are often limited to Japan or South Korea, which are not representative of the whole region.

Figure 1: Number of initiatives and average readiness score by vertical, Asia–Pacific and Middle East and Africa [Source: Analysys Mason, 2014]

Opportunities exist in verticals that have a high average readiness score and a small number of deployed initiatives. In APAC, smart homes, mobile education and mobile agriculture are potential growth verticals for mobile operators. In MEA, opportunities exist in mobile education, mobile financial services and mobile health.

Source: Analysys Mason